Tag: Energy & Climate

Lucie Pinson talks about how to win the big fights - by Blair Palese of Climate and Capital Media

Climate Finance Campaigner Wrangles Europe’s Giant Banks and Companies

By Blair Palese, Climate and Capital Media

Lucie Pinson talks about how to win the big fights.

 

Climate and Capital Media Featured NewsI’ve been long overdue for a Beers with Blair conversation in the new year. Who better to talk to than the highly energetic, award-winning climate finance campaigner Lucie Pinson, CEO of Reclaim Finance. We spoke remotely, her in Paris, me in Sydney, and the discussion ranged from her work journey to some of her incredible successes over the years in getting banks and companies to move — and move more effectively — on climate change.

Lucie founded France-based Reclaim Finance in 2020, which she has headed up ever since. That same year, she was one of the six winners of the Goldman Environmental Prize — the Nobel Prize, if you will, for environmental activists. Her many successes include leading campaigns that saw 16 French banks end investment in coal and 15 of the world’s biggest insurers and reinsurers stop supporting new coal mines and plants.

I asked Lucie to share the secret for getting results from business sectors not known for moving quickly on anything that doesn’t generate profit.

“I try to identify the biggest fights where I can have the biggest impact.” Then she focuses on four priorities:

“Being strategic, using each campaign to become stronger and ensuring your work helps the broader movement … And being very well connected.”

Blair:  So, is it hard to be taken seriously by the banking and insurance sectors and what motivates them to take action?

Lucie: “Just a few years ago it was hard,” she said. “Most had the idea that to work in finance, you needed to be a man and wear a suit and to talk only about economics and finance,” she said. “That started to change about a year ago. We’ve seen people everywhere become quite scared of the gravity of the climate crisis.”

Blaire:  OK, but has that translated into more action? Is it real or just business as usual?

Lucie:  “Most companies are doing what they need to do to protect themselves,” she said. “But we are still looking for big examples of companies and banks taking real action.”

AXA IM, which manages more than €869 billion ($994 billion) in assets, she said, recently announced new climate commitments, including moving “toward” divesting from high impact companies and bolstering investment in climate solutions.

Sounds like progress, but it’s easier said than done.

“We had hopes that AXA was going to be a real leader last year. Before COP26 they were well-positioned to do it,” she said. “They were one of the first to announce plans to move out of coal in 2015, but they lost their ambition.”

Rather than announce solid initiatives, the company continued to commit only to stop the financing of fossil fuels “at some point.”

Not exactly the kind of leadership one expects from the leader of the Net Zero Asset Owners Alliance.

Blair:  So, are efforts like the Net Zero Asset Owners Alliance and the Glasgow Financial Alliance for Net Zero (GFANZ) coming out of COP26 helpful or not?  

Lucie:  “These things have no enforcement mechanism, no way to kick out those that are greenwashing,” she said.

I can’t resist asking Lucie what she thought of the recent BlackRock letter by CEO Larry Fink that focused on stakeholder capitalism and climate change.

“BlackRock … it’s a joke. The company has done nothing real in the last two years,” she said. “They made a 2020 commitment that we thought might be the beginning of something. Nothing happened. Their voting record is full of holes. They continue to advocate for gas, ignoring the IEA mandate. They continue to support hundreds of new gas plants locking in decades of fossil fuels. Vanguard and State Street are the same.”  

Blair:  Any good companies?

Lucie:  “Unfortunately at the moment, it’s a short list,” she said. “Allianz has been a driver of climate change action. When Oliver Bäte became CEO three years ago, he said we must lead the charge against climate change, but the company hasn’t cleaned up its investments. BNP Paribas had a great position in 2017 on oil and gas but has now tripled down on its financing of oil and gas.”

Given how slowly corporate climate action is moving, I ask Lucie how she and her team keep the pressure on and how they keep the dialogue going.

“We let financial institutions know if we are going to target them, let them see our reports before we release them so that they can fact check them and respond, make sure there are no mistakes. We want to make sure the debate is about the right issues, the big issues.”

 

Article by Blair Palese, a writer and project manager on a wide range of climate change projects. In 2009, she cofounded 350.org Australia and was its CEO for 10 years. Previously, she was a communications director for Greenpeace International and Greenpeace USA, head of international public relations for the Body Shop, editor-in-chief of Greenpages magazine, and worked at Washington Monthly and ABC.

Additional Articles, Energy & Climate, Impact Investing, Sustainable Business

Plant-based Innovation and Climate ETF from VegTech Launches on NYSE.

Plant-based Innovation & Climate ETF from VegTech Launches on NYSE

VegTech™ Plant-based Innovation & Climate ETF (Ticker: EATV), a global ETF of publicly-traded plant-based innovation companies, recently launched on the New York Stock Exchange (NYSE).

The first financial product from the VegTech™ Invest advisory, the VegTech™ ETF (Ticker EATV), includes 37 publicly traded companies actively innovating with plants and plant-derived ingredients and producing primary products that are animal-free. VegTech Invest advisors, Elysabeth Alfano and Sasha Goodman, believe these companies positively impact climate change as well as solve some of the world’s most pressing problems such as food security, deforestation, animal cruelty and growing public health concerns.

VegTech: A Pure-Play in Plant-Based Innovation

“We are excited to be what we believe is the first pure-play ETF that invests in companies innovating with plants and producing animal free products. We believe that today’s investors want a more resource efficient, climate friendly, and cruelty-free food and materials supply system…and want to invest their dollars in the same,” says VegTech Invest CEO and CMO, Elysabeth Alfano. “My partner Sasha Goodman and I are excited to offer an ETF that empowers the average person to invest with their values and participate in this large-scale, secular trend.”

“With this ETF, I am excited to drive capital to plant-based innovation companies. I also hope to encourage public companies to lead the way and replace animal products with innovations that are better for people, the planet and the animals,” VegTech Invest President and Fund Manager, Sasha Goodman says.

The Big Shift: A Secular Trend for Health & Sustainability

According to a June 29, 2020, study by Aramark, 65% of Gen Zers want a more “plant-forward” diet, while 79% would eat meatless meals once or twice a week, either now or in the future. Further, First Insight: The State of Consumer Spending noted on October 28, 2021, that “growing plants requires fewer resources than raising animals for meat,” and reported that 68% of Millennials are willing to pay more for sustainable products.

A March 23, 2021, report by Boston Consulting Group indicates that the alternative protein market will reach at least $290B by 2035. Indeed, Covid-19 has provided an unexpected boost to the alternative protein industry, which is expected to grow at a compound annual growth rate (CAGR) of 11.2% from 2020 to 2027, according to an April 2021 report from Meticulous Research. That report also noted that an alternative protein-based diet can help reduce the effects of the novel corona virus on at-risk people as there is the presence of an abundance of macronutrients, micronutrients, and antioxidants.

 

About VegTech™ Invest

VegTech Invest™ is an investment management firm advising the thematic ETF, EATV. EATV invests in VegTech™ Companies: those that are actively innovating with plants and plant-derived ingredients and producing primary products that are animal-free.

At VegTech™ Invest, we believe these companies positively impact planetary health, human health, and animal health. We also believe that we are on the cusp of a long-term, secular trend of plant-based innovation that will result in the disruption of the global food and materials supply chain for a more efficient, climate friendly and cruelty-free system. The VegTech™ ETF is dedicated to providing exposure to this key and growing trend. 

For information on the ETF, including the prospectus, visit our website.

Exchange Traded Funds (ETF) are bought and sold through exchange trading at market price (not NAV) and are not individually redeemed from the fund. Shares may trade at a premium or discount to their NAV in the secondary market. Brokerage commissions will reduce returns.

The fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus and summary prospectus (if available) contains this and other important information about the investment company, and it may be obtained by calling 1-424-237-8393, emailing info@vegtechinvest.com or visiting EATV.VegTechInvest.com. Read it carefully before investing.

 

The compound annual growth rate (CAGR) is the rate of return (RoR) that would be required for an investment to grow from its beginning balance to its ending balance, assuming the profits were reinvested at the end of each period of the investment’s life span.

Investing involves risk including the possible loss of principal. Past performance does not guarantee future results.

The fund is an actively managed ETF that does not seek to replicate the performance of a specified index. Foreign securities may be more volatile and less liquid than domestic (U.S.) securities, which could affect the Fund’s investments. Stocks of companies with small and mid-market capitalizations involve a higher degree of risk than investments in the broad-based equities market.

The fund is non-diversified and may hold large positions in a small number of securities. A price change in any one of those securities may have a greater impact on the fund’s share price than if it were diversified. The Fund is newly organized and has a limited operating history to judge.

ETF distributed by Quasar Distributors, LLC

Additional Articles, Energy & Climate, Food & Farming, Impact Investing, Sustainable Business

ImpactAssets releases 2022 Impact Investment Fund Managers List - GreenMoney

ImpactAssets releases its 2022 Impact Investment Fund Managers List

Industry’s first publicly available, searchable resource of impact investing fund managers zeroes in on some of the industry’s most impactful managers.

ImpactAssets recently released the ImpactAssets 50 2022 (IA 50), a free annual database for impact investors, family offices, corporate and family foundations and institutional investors that features a diversified listing of private capital fund managers delivering social and environmental impact as well as financial returns.

This year marks the eleventh edition of the IA 50, which now includes the IA 50 Emerging Impact Managers list and IA 50 Emeritus Impact Managers list. Across all three categories, 143 impact fund managers reported assets totaling $116.96 billion invested in a range of asset classes and impact themes. Fifteen managers selected in this year’s showcase reported assets exceeding $1 billion. An additional ten had assets under management between $500 million and $1 billion.

“We’re excited about this year’s IA 50, with its dramatic expansion and diversification of impact fund managers across a spectrum of strategies, geographies and investment targets,” said Jed Emerson, ImpactAssets Senior Fellow, IA 50 Review Committee Chair and Global Lead, Impact Investing with Tiedemann Advisors. “This group of managers reflects the intentionality of our manager selection process to provide investors with a resource that shines a light on the breadth and diversity of impact fund managers. These managers bring unique and informed perspectives to the challenges impact investing is addressing.”

Some Highlights from this year’s IA 50:

Impact Focus – About 18% of IA 50 managers across all three lists focused on clean technology, alternative energy and climate change, making it the top impact theme. Microfinance, low-income financial services, and micro-insurance (16%) comprised the second-largest impact focus. Notably, 12% of funds selected Diversity, Equity, and Inclusion as their primary investment theme. The most represented Sustainable Development Goals cited by fund managers included Decent Work and Economic Growth (21%), No Poverty (15%), Reduced Inequality (13%) and Climate Action (9%).

Diversity and Inclusion – While asset management as a whole remains overwhelmingly non-diverse—with approximately 2% of asset managers who are Black, Indigenous or People of Color — IA 50 fund managers are leading with diversity. This is most prevalent among IA 50 Emerging Impact Managers, where 50% reported that 50% or more of their investment professionals were people of color. In addition, 60% reported more than half of their investment professionals were women.

Asset Class – IA 50 fund managers drive their focus on deep impact chiefly in private markets. Managers reported that 55% of their funds are primarily private equity, while 36% are primarily private debt. Private Equity – Early Stage (US), with 22% of all funds, is the most represented focus of managers.

Impact and Financial Return – Although impact investing can offer a range of returns—from concessionary to above-market rates of return—IA 50 managers reported delivering both positive impact and competitive investment performance. A total of 74% of IA 50 managers target market rates or above market rates of return, and 97% reported delivering either in line or above their initial target returns. Emerging Impact Managers reported similar results, with 76% of managers targeting market rates or above market rates of return and 72% delivering either in line or above their initial target returns.

In addition, 25 of the IA 50 fund managers are signatories to the Operating Principles for Impact Management—a framework for investors to ensure that impact considerations are purposefully integrated throughout the investment life cycle—and 18 of the 25 have been verified to date, according to a separate analysis by BlueMark, a provider of independent impact verification services for investors and companies.

“The caliber of this year’s IA 50 lists is a product of the rigorous application scoring and analysis process that the IA 50 Review Committee has fine-tuned through the years,” added Sandra Kartt, CFA, Managing Director, Investments, ImpactAssets. “We’re thrilled to foster the continuing growth of these unique, innovative investing approaches addressing critical issues from climate to racial equity and gender equality.”

In addition to Emerson, the IA 50 Review Committee is comprised of impact investment experts and leaders, including Lauren Booker Allen, Senior Vice President, Impact Advisory, Jordan Park Group; Mark Berryman, Managing Director of Impact Investing, The CAPROCK Group; Ronald A. Homer, Chief Strategist, Impact Investing, RBC Global Asset Management (US) Inc.; Jennifer Kenning, Senior Advisor, IA 50 Review Committee and CEO & Co-Founder, Align Impact; Karl “Charly” Kleissner, Ph.D., Co-Founder of Toniic and KL Felicitas Foundation; Justina Lai, Chief Impact Officer and Shareholder, Wetherby Asset Management; Andrew Lee, Managing Director, Global Head of Sustainable and Impact Investing, UBS Global Wealth Management; Tony Lent, Co-Founder, Capital for Climate; Malaika Maphalala, CPWA® Private Wealth Advisor, Natural Investments, LLC; Cynthia Muller, Director of Mission Investment, W.K. Kellogg Foundation; Rehana Nathoo, Founder & CEO, Spectrum Impact; Stephanie Cohn Rupp, CEO and Partner, Veris Wealth Partners; Liesel Pritzker Simmons, Co-Founder and Principal of Blue Haven Initiative; and Margret Trilli, CEO and CIO, ImpactAssets.

The ImpactAssets Investment team led by Kartt conducted the application scoring and analysis process, and collaborated with Align Impact on fund analysis.

  

About the ImpactAssets 50 

The IA 50 is the first publicly available database that provides a gateway into the world of impact investing for investors and their financial advisors, offering an easy way to identify experienced impact investment firms and explore the landscape of potential investment options. The IA 50 is intended to illustrate the breadth of impact investment fund managers operating today, though it is not a comprehensive list. Firms have been selected to demonstrate a wide range of impact investing activities across geographies, sectors and asset classes.

The IA 50 is not an index or investable platform and does not constitute an offering or recommend specific products. It is not a replacement for due diligence. To be considered for the IA 50 2022, fund managers needed to have at least $25 million in assets under management, more than three years of experience as a firm with impact investing, documented social and/or environmental impact and be available for US investment. Additional details on the selection process are available here.

The IA 50 Emerging Impact Managers list is intended to spotlight newer fund managers to watch that demonstrate potential to create meaningful impact. Criteria such as minimum track record or minimum assets under management may not beapplicable.

The IA 50 Emeritus Impact Managers list illuminates impact fund managers who have achieved consistent recognition on the IA 50.

About ImpactAssets

ImpactAssets is an impact investing trailblazer, dedicated to changing the trajectory of our planet’s future and improving the lives of all people. As a leading impact investing firm, we offer deep strategic expertise to help our clients define and execute on their impact goals. Founded in 2010, ImpactAssets increases flows of money to impact investing in partnership with our clients through our impact investment platform and field-building initiatives, including the IA 50 database of private debt and equity impact fund managers. ImpactAssets has more than $2 billion in assets in 1,700 donor advised fund accounts, working with purpose-driven individuals and their wealth managers, family offices, foundations, and corporations. ImpactAssets is an independent 501(c)(3) organization.

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Domini Funds Releases their 2021 Impact Report

Domini Funds Releases their 2021 Impact Report

The Report Highlights a Just Transition, Corporate Emissions, and Access to Affordable Housing

Domini Fund 2021 Impact Report coverProgress stems from the connections we make — between our money, our values, and an array of social and environmental issues. In 2021, assets in the five Domini Funds reached over $3 billion. For Domini, this growth has gone hand-in-hand with new efforts to understand critical global challenges and look closely at how companies are responding.

The Domini Funds’ new report underscores how the legacy of our impact investment standards, in-house research, and investor community helped to address some of 2021’s most pressing issues—the climate crisis, cyberwarfare threats, and a number of other sustainability priorities.

“Our future holds hope to be greater and greener as investors come together with a mutual care for people, planet and profit,” says CEO Carole Laible. “We use our environmental and social investment standards to help us identify strong, long-term investments. We apply these standards consistently across all of our products as we believe it is how all investing should be done.”

Report Highlights:

Reducing carbon intensity

The Domini Impact Equity Fund’s portfolio was 61% less carbon intensive than its benchmark in 2021.

  • The fund has lowered its carbon intensity vs. the S&P 500 over the past two years. In 2019, it was 55% less carbon intensive than its benchmark.

Enhanced corporate climate analysis

Domini analyzes how companies’ business models are positioned for an environment that limits global temperature rise to 1.5 degrees.

  • As a result, the firm strengthened its approach to corporate climate change policies and practices to better assess companies’ climate action targets.

New cybersecurity considerations

  • Cyberwarfare can target hospitals, critical infrastructure, and high-risk weapons facilities.
  • Domini views it as a potential weapon of mass destruction and has updated its Impact Investment Standards accordingly. The firm excludes from its investment universe the sovereign debt of countries most extensively involved in cyberwarfare.

Advocacy for a just transition

Emissions targets are just one component of an adequate and inclusive climate response.

  • Domini encourages companies to design climate transition plans that meet the needs of workers and support the most vulnerable communities.

Helping expand access for all

Providing affordable access to basic services and resources without discrimination helps communities thrive.

  • The Domini Funds, particularly the Domini Impact Bond, help channel capital to support the foundational needs of communities—such as healthcare, education, and infrastructure. The fund holds bonds of several issuers that work to improve access to affordable housing, financial services, and other basic services.

Direct dialogue with companies

Investors have a powerful voice. Direct dialogue, collaboration, and partnerships play a crucial role in improving corporate governance and encouraging stronger policies.

  • Domini—on its own and in collaboration with other investors—engaged 365 companies (53% U.S.-based, 47% international) on areas such as board diversity (race and gender), vaccine access, workers’ rights, and supply chain transparency.
  • Domini joined global institutional investors on the Pandemic Resilience 50 in engagements across real estate, international drug stores and pharmacy chains, technology companies, and transportation, encouraging companies to share board accountability for human capital management and workers’ well-being.

To find out more about these initiatives and highlights, read our full report:  www.domini.com/2021Impact

 

About Domini Impact Investments LLC:
Domini Impact Investments LLC is a women-led SEC registered investment adviser that harnesses the power of finance to help create a better world. With an exclusive focus on impact investing that aims to help create positive outcomes for our planet and its people while seeking competitive financial returns, our continuous innovation and caring, diverse community fuel tomorrow’s prosperity as we endeavor to make “investing for good” the way all investing is done.

Before investing, consider each Fund’s investment objectives, risks, charges and expenses. Contact us at 1.800.225.3863 for a prospectus containing this and other important information. Read it carefully.

The Domini Funds are not bank deposits and are not insured. Investing involves risk, including possible loss of principal. The market value of Fund investments will fluctuate. The Domini Impact Equity Fund is subject to certain risks including impact investing, portfolio management, information, market, recent events, and mid- to large-cap companies’ risks. The Domini International Opportunities Fund is subject to certain risks including foreign investing, geographic focus, country, currency, impact investing, and portfolio management risks. The Domini Sustainable Solutions Fund is subject to certain risks including sustainable investing, portfolio management, information, market, recent events, mid- to large-cap companies and small-cap companies’ risks. The Domini Impact International Equity Fund is subject to certain risks including foreign investing, emerging markets, geographic focus, country, currency, impact investing, and portfolio management risks. Investing internationally involves special risks, such as currency fluctuations, social and economic instability, differing securities regulations and accounting standards, limited public information, possible changes in taxation, and periods of illiquidity. These risks may be heightened in connection with investments in emerging market countries. The Domini Impact Bond Fund is subject to certain risks including impact investing, portfolio management, style, information, market, recent events, interest rate and credit risks.

The Adviser’s evaluation of environmental and social factors in its investment selections and the timing of the Subadviser’s implementation of the Adviser’s investment selections will affect the Fund’s exposure to certain issuers, industries, sectors, regions, and countries and may impact the relative financial performance of the Fund depending on whether such investments are in or out of favor. The value of your investment may decrease if the Adviser’s or Subadviser’s judgement about Fund investments does not produce the desired results. There is a risk that information used by the Adviser to evaluate environmental and social factors, may not be readily available or complete, which could negatively impact the Adviser’s ability to evaluate such factors and Fund performance.

The Standard & Poor’s 500 Index (S&P 500) is a market-capitalization weighted index representing the performance of large-capitalization companies in the U.S. Investors cannot invest directly in the S&P 500. The S&P 500 Index is a product of S&P Dow Jones Indices LLC (“SPDJI”) and has been licensed for use by Domini. Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”); Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”); S&P® and S&P 500® are trademarks of S&P; and these trademarks have been licensed for use by SPDJI and sublicensed for certain purposes by Domini. Domini product(s) are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, or their respective affiliates and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability for any errors, omissions, or interruptions of the index.

The Domini Funds are only offered for sale in the United States. DSIL Investment Services LLC, Distributor, Member FINRA. Domini Impact Investments LLC is the Funds’ Adviser. The Funds are subadvised by unafilliated entities. 3/22

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How to Avoid Greenwashing When Choosing ESG Investments by Lori Keith of Parnassus Investments

How to Avoid Greenwashing When Choosing ESG Investments

By Lori Keith, Parnassus Investments

ESG strategies are rapidly gaining popularity as interest in supporting companies that manage their carbon footprints, invest in their employees, and promote diversity surges. As more and more funds claim the ESG label, how can investors effectively decide which investments are genuine?

Lori Keith of Parnassus Investments

Avoiding Investments that Masquerade as ESG Choices

If you’re seeking to align your financial investments with your values, your decisions about which funds to include in your portfolio take on an additional dimension of complexity. Naturally, you should look for funds that most closely align with your own principles. And, above all, you should take steps to avoid any ESG-labeled fund that does not diligently pursue its stated objectives.

A Practical Framework for Evaluating ESG Funds

Here are some steps you can take to perform effective ESG due diligence and avoid being misled by labels:

  1. Read the prospectus and review the holdings. The prospectus should identify whether all the fund’s holdings are evaluated using ESG metrics, or whether the fund simply employs screens to exclude a few types of companies, such as tobacco or gambling firms, but does not vet each company in the portfolio for broad ESG progress. The prospectus should also reveal whether a fund “considers” ESG or fully integrates ESG criteria into its investment process and portfolio construction. In addition, reviewing the holdings can provide insights about whether the Fund’s portfolio aligns with the claims made by the fund company.
  1. Learn about the fund’s investment philosophy and process. Does the fund have a discernable ESG philosophy, and does the investment process include ESG analysis? Does the team perform their own ESG materiality assessment, or do they rely exclusively on third-party research providers for ESG ratings on companies? Do the portfolio managers and analysts actively buy into the ESG process, and are they truly engaged in assessing material ESG risks and opportunities?
  1. Investigate what the portfolio managers seek to gain by choosing ESG-vetted investments. Do they consider ESG progress an indicator of company quality? Are they seeking to avoid material ESG risks?
  1. Look for markers of stewardship excellence. Does the fund manager disclose their proxy voting decisions, and do these decisions align with their stated ESG values? Does the investment firm encourage positive change in portfolio companies through engagement with senior management? Does the firm maintain memberships in any independent organizations that promote ESG investing, such as Ceres or US SIF?
  1. Consult third-party sources. For example, Morningstar has several ESG rating systems. The Morningstar Commitment Level qualitatively evaluates funds’ commitments to ESG and rates them on a scale ranging from Leader to Low. The Morningstar Sustainability Rating measures how the companies held in portfolios are managing their ESG risk relative to the fund’s Global Category peer group. Funds may also be given carbon scores by Morningstar.

The good news is that there are many more choices for ESG investors than ever before. However, because regulatory standards don’t yet exist, it is important to do your own homework to make sure your financial investments match your values.

 

Article by Lori Keith, the Director of Research at Parnassus Investments and Portfolio Manager of the Parnassus Mid Cap Fund with responsibility for portfolio management for the firm’s Mid Cap strategy. She joined Parnassus Investments in 2005 after serving as a Parnassus research intern. Before joining the firm, Ms. Keith was a Vice President of Investment Banking at Deloitte & Touche Corporate Finance LLC and was a Senior Associate in Robertson Stephens & Company’s investment banking division. Prior to that, she worked in the management consulting practice at Ernst & Young. Ms. Keith received her bachelor’s degree in economics from the University of California, Los Angeles and her master’s degree in business administration from Harvard Business School.

Disclosures

For the current holdings of the the Parnassus Core Equity Fund, the Parnassus Endeavor Fund, the Parnassus Mid Cap Fund, the Parnassus Mid Cap Growth Fund and the Parnassus Fixed Income Fund please visit the fund’s individual holdings web page. Current and future portfolio holdings are subject to change.

The views expressed are subject to change at any time in response to changing circumstances in the markets and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the Parnassus Funds.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE GUIDELINES – The Fund evaluates financially material ESG factors as part of the investment decision-making process, considering a range of impacts they may have on future revenues, expenses, assets, liabilities, and overall risk. The Fund also utilizes active ownership to encourage more sustainable business policies and practices and greater ESG transparency. Active ownership strategies include proxy voting, dialogue with company management and sponsorship of shareholder resolutions, and public policy advocacy. There is no guarantee that the ESG strategy will be successful.

Mutual fund investing involves risk, and loss of principal is possible. There are no guarantees any investment strategy, including a socially responsible (ESG) investment strategy, will be successful in any market environment.

The Parnassus Funds are underwritten and distributed by Parnassus Funds Distributor, LLC.

US SIF: The Forum for Sustainable and Responsible Investment is the leading voice advancing sustainable investing across all asset classes. Its mission is to rapidly shift investment practices toward sustainability, focusing on long-term investment and the generation of positive social and environmental impacts. Our members, representing $5 trillion in assets under management or advisement, include investment management and advisory firms, mutual fund companies, research firms, financial planners and advisors, broker-dealers, banks, credit unions, community development organizations, non-profit associations, and asset owners.

Ceres is a nonprofit organization transforming the economy to build a just and sustainable future for people and the planet. Ceres works with the most influential capital market leaders to solve the world’s greatest sustainability challenges. Through powerful networks and global collaborations of investors, companies and nonprofits, Ceres drives action and inspires equitable market-based and policy solutions throughout the economy.

Before investing, an investor should carefully consider the investment objectives, risks, charges and expenses of the Funds and should carefully read the prospectus or summary prospectus, which contains this information. A prospectus or summary prospectus can be obtained on the website, www.parnassus.com or by calling (800) 999-3505.

Energy & Climate, Featured Articles, Impact Investing, Sustainable Business

Investing in Women, Impacting the World

By Stella Tai, Praxis Mutual Funds

Above: Stella meeting with representatives from SunCulture, an organization connecting rural farmers with solar power.

 

Stella Tai-Praxis Mutual FundsIn my 15-year career working as a woman in impact investing and its various facets geared towards investing in women, I have learned that communities and families benefit greatly when women thrive economically.

In December 2021, I had the privilege of visiting several organizations in Kenya supported through Praxis Mutual Funds’ commitment to community development investing. This was alongside a visit to my family in my birth country, after five years of being away. This article is a personal reflection on how impact and gender lens investing delivers real-world impacts – and how advisors can help their clients understand those impacts.

Impact investment moves capital to where it’s needed most. This often revolutionizes the lives of women and girls. During my visits, I saw what capital was achieving, on the ground among rural women, many of whom were poor, and on small farms using affordable products developed and customized to meet their needs. This solidified the importance of this work in my mind.

Gender lens investing (GLI) is critical in closing global gaps in access to capital and thereby increasing human capital wealth, education and helping countries achieve their full developmental potential. In a more diverse and equal society, everyone benefits.

Project in Kenya

Many rural women in Kenya face specific and unique challenges such as a lack of easy access to clean water and affordable clean energy. When there are appropriate interventions, these women are placed on the fast track to achieving economic milestones that can propel them and their families into the middle or the upper-middle class.

The organizations I visited were not founded with the primary purpose of helping women, but by evaluating the results of these investments through a gender lens, it becomes clear that the positive effects on the lives of women and girls are disproportionately greater.

SunCulture client Mrs. Ndegwa: Local women farmers are able to access solar-powered farming technology because of SunCulture.

SunCulture – This organization focuses on providing energy access through solar home and irrigation systems. About 65 percent of land in sub-Saharan Africa is tilled, plowed, weeded and watered manually. I met with two industrious women farmers whose lives had been transformed by access to energy.

SunCulture off-grid solar panels and tech provide smallholder farms with reliable lighting, water generation and mobile charging
SunCulture off-grid solar panels and technology provides smallholder farms with reliable lighting and mobile charging.

With access to a water pump for their wells, they could irrigate their farms more efficiently and increase productivity. The energy then led to increased yields and higher incomes for their households, which in turn meant that these women could invest in their children’s educations – creating more opportunities for the future of their families.

BioLite cookstoves provide a safe way to cook food - Praxis Mutual Funds
BioLite cookstoves provide a safe way to cook food, charge electronic devices, and generate light for families in Kenya.

BioLite – BioLite developed a clean energy cookstove and home lighting solar system with USB ports for charging devices like cell phones. They aim to bring electricity to the nearly 600 million people in sub-Saharan Africa who are not connected to the national electricity grid and the hundreds of millions more who live with unreliable connections and are plagued by frequent blackouts.

Investors need to appreciate the benefits these stoves offer women specifically. To meet the domestic needs of their families, many rural women often walk hours to fetch water or carry wood for cooking, which can be arduous and takes time away from a girl’s education or a woman’s economic opportunities. These regionally appropriate innovations not only connect the whole families with electricity, but the stoves allow women to cook more safely and redeem precious time to better themselves educationally, economically and socially.

What Does the Future Hold?

Impact investments with a gender lens are projected to increase over the next decade across all asset classes. In recent years, we’ve seen growing demand from investors to take gender into account when considering impact investing.

Additionally, the projected wealth transfer to women is predicted to increase from about $50 trillion in 2015 to $72 trillion, that is two-thirds of the worlds’ wealth, by 20301. Women investors are more likely to demand increased inclusivity, diversity, and values-aligned investing, which may lead to increased consideration of gender in impact investing.

Gender-lens investing is a field that will continue to grow, considering the increased attention and engagement with the 17 UN Sustainable Development Goals (SDGs)*. SDGs relevant to gender include SDG 5 (gender equity), SDG 10 (reduce inequality), SDG 8 (sustainable economic growth) and SDG 7 (sustainable energy).

The SDGs aim to end poverty, protect the planet and ensure prosperity for all. As more investors and investment companies call for alignment with these goals, gender equity and equality will become areas of greater interest for impact investors.

What Can Financial Advisors Do?

Advisors interested in impact investing that incorporates a gender lens should initiate the conversation. They can open the door to a discussion on a client’s gender lens investing goals by engaging with clients on how they can better align their portfolios or a portion of their portfolios with their values.

Secondly, advisors can familiarize themselves with gender lens investing topics and be ready to engage with the clients, especially women, as their percentage of global wealth continues to grow.

Another option for advisors is to encourage the use of donor advised funds that hold immense opportunities for increasing a client’s impact. DAFs are a powerful tool that allows investors interested in aligning their investment portfolios with their values to make charitable contributions while simultaneously getting tax benefits.

Advisors and/or their clients can take part in insight trips and observe how their funds contribute to improvement in the lives of women and girls. This is a great way for younger people to be inspired at the start of their investment journeys and for established investors to confirm the difference their investments are making in the world.

One of my hopes is that, as an industry, we might build greater collaborations around gender lens investing themes. For example, investment firms, both for-profit and non-profit, and other stakeholders such as government entities interested in gender lens investing can collaborate on sharing information, participating in deals, spurring innovation, building systems of educating clients and thereby accelerating greater amounts of capital flowing into this theme.

The cumulative effect of all these efforts will deliver real impact and will also help investors understand the range of possibilities available on the investing spectrum — from 100 percent philanthropic to 100 percent market-rate returns and everything in between.

How Praxis Approaches Community Development Investing 

By committing approximately 1 percent of its funds to Community Development Investing nationally and internationally, Praxis has further deepened its commitment to GLI. This investment is managed by Calvert Impact Capital, a nonprofit investment firm that makes loans to roughly 100 mission-driven organizations worldwide with high impact social and/or environmental focus such as micro-finance, affordable housing and cooperatives.

As of 2021, the CIC portfolio had impressive gender impact numbers. Women represented:

  • 70% of the end clients of the borrowers.
  • 53% of the borrower staff.
  • 42% senior leadership in borrower organizations.
  • 43% of the board of directors.

Impact investing through a gender lens is an accelerator to gender equity and equality not only in the United States but globally. If we want to effectively give people the tools they need for economic and educational advancements, focusing on raising the economic power of women is a key step in creating lasting change. That is why at Praxis Mutual Funds, we are committed to making real impacts when it comes to gender equity and why we are passionate about showing advisors the effects of gender lens investing.

 

Article by Stella Tai, Stewardship Investing Impact and Analysis Manager

Stella provides primary leadership for the promotion, integration and development of impact investing and reporting. Before joining Praxis, she was assistant vice president of Lending at FINANTA, a Community Development Financial Institution (CDFI) in Philadelphia. Stella has served on the board of Chariots for Hope, a nonprofit supporting a network of eight children’s homes in Kenya, her country of origin. Connect with Stella on LinkedIn.

Footnote:
[1] “Here’s who will benefit the most from the $59 trillion ‘Great Wealth Transfer’”: Bankrate, Sept. 25, 2018
*  In 2015, the UN announced the Sustainable Development Goals as a call to action for countries, governments, funders, and investors to unite to accomplish 17 global goals. These goals recognize that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests. The UN has provided a framework of specific indicators to measure progress and a timeframe to achieve them by 2030, both of which reinforce the urgency and crucial nature of this work.

About Praxis

Praxis Mutual Funds is a leading faith-based, socially responsible family of mutual funds designed to help people and groups integrate their finances with their values. Praxis is the mutual fund family of Everence Financial, a comprehensive faith-based financial services organization helping individuals, organizations and congregations. To learn more, visit praxismutualfunds.com and everence.com, or call 800-348-7468.

Consider the fund’s investment objectives, risks, charges and expenses carefully before you invest. The fund’s prospectus and summary prospectus contain this and other information. Call 800-977-2947 or visit praxismutualfunds.com for a prospectus, which you should read carefully before you invest.

Praxis Mutual Funds are advised by Everence Capital Management and distributed through Foreside Financial Services, LLC, member FINRA. Investment products offered are not FDIC insured, may lose value, and have no bank guarantee.

Energy & Climate, Featured Articles, Food & Farming, Impact Investing, Sustainable Business

The Year Ahead--Three Water Trends by Will Sarni-The Water Foundry

The Year Ahead: Three Water Trends

By Will Sarni, The Water Foundry

In January 2021, I wrote in GreenBiz that the year ahead for water could be viewed as the roaring 20s and as a period of creative destruction. As I reflect on 2021 and the year ahead, I am doubling down on this view with three trends that are proof points that water innovation is accelerating and disrupting the status quo.

Extreme Decentralization is Moving into your Home

The move to diversify from centralized water and wastewater treatment systems has been underway for years. This is not to imply that centralized systems will be completely replaced. Instead, there are now alternatives for water supply and treatment.

The trend to provide options to centralized systems is accelerating with a recent move to technologies that can be viewed as “extreme decentralization,” as outlined in this essay, “The Third Route: Using Extreme Decentralization to Create Resilient Urban Water Systems.” The authors frame a complementary path to centralized systems that includes “household-based personalized water systems.”

In my view, these personalized water systems include technologies for off-grid water supply systems (such as the panels from Source), home water reuse (including technologies from Hydraloop) and real-time water data information sources for quantity (Conservation Labs) and quality (Safespout).

Off-grid water supply, reuse and home water performance will be enabled by these real-time data digital technologies. View these technology categories as augmenting centralized water and wastewater treatment systems and delivering access to water where centralized systems are unavailable. An important initiative in this trend is the work of the 50 Liter Home Coalition which has a vision to create abundance for water through the adoption of advanced water technology in the home.

Exponential Technologies are Taking Off

Deloitte defines exponential technology as “innovations progressing at a pace with or exceeding Moore’s Law” that “evidence a renaissance of innovation, invention and discovery … [and] have the potential to positively affect billions of lives.”

Xponential Works adds that “exponential technologies are those innovations that continue to advance exponentially, with disruptive economic and lifestyle effects.”

Examples of technology categories in the water sector include digital technologies and advanced materials. Digital technologies encompass artificial intelligence, augmented and virtual reality (AR, VR) and robotics.

The applications of these technologies are appearing in the utility and private sector to vastly improve resource use, reduce carbon emissions and manage infrastructure, manufacturing assets and supply chains. Company examples include Plutoshift and Fido Tech, the work of KWR Water and WatchTower Robotics. Advanced materials are being applied in off-grid water supply technologies (such as Source) and treatment membranes (evove).

Typically, water technology innovation is linear: slow and evolutionary not revolutionary. But these exponential technologies are disruptive, not just evolutionary, innovations that will transform public sector and private sector water management. One just has to look at how exponential technologies have disrupted other sectors such as the energy sector. The rise of residential solar is one example that is illustrative of what could happen for water.

The Hydration Revolution

This is not an indictment of tap water but instead, a recognition that consumers are moving to alternative hydration methods and in-home water treatment solutions. The reality is that an estimated 60 million Americans don’t trust tap water. The reasons are complex but can be broken down into perceived risks from tap water, such as the taste; real risks such as lead contamination; and brand preferences for bottled water. Regardless of the motivation, this lack of trust in tap water is driving innovation and consumer preferences about how they hydrate.

According to research by Asher Rosinger, Anisha Patel and Francesca Weaks, Americans don’t trust the water from their tap. The two state, “Taking that into account that an estimated two million Americans don’t have access to safe drinking water, about 59 million people have tap water access from either their municipality or private wells or cisterns but don’t drink it. While some may have contaminated water, others may be avoiding water that’s actually safe.”

Since the 2013 to 2014 timeframe (just prior to the lead crisis in Flint, Michigan’s water system), the prevalence of adults who don’t drink their tap water has increased by 40 percent. The number of children not consuming tap water rose by 63 percent. The authors reference a 2020 study by anthropologist Sera Young, which found that tap water avoidance was declining before the Flint water crisis that began in 2014. In 2015-2016, however, it started to increase again for children.

The implications of this trend are that consumers seek alternatives to tap water and installing in-home treatment systems. They are attracted to “personalized water” options (such as SodaStream or rocean) and tracking hydration as part of the trend in personal wellness (via bottles and apps such as Rebo). While these supplies will not replace traditional water utilities, they will challenge them to manage customer perceptions and consider potential partnerships with alternative hydration businesses.

What This All Means: Investors Just Add Water

The rush is on to invest in the water sector. Disruption of the water industry (I view the “water industry” as very broadly defined beyond water utilities and water technology providers) is accelerating and being driven by investors.

This increasing interest is being driven by the impacts of climate change on our hydrologic cycle resulting in water scarcity in places such as the American West. Organizations such as Nasdaq and the Financial Times (Water stress drives investor interest to address supply shortage) recently reported on investing in water in response to water-related risks to the private and public sectors.

Investors are looking for innovative solutions to address water scarcity, poor quality and access to safe drinking water. It is likely that most investments will be in evolutionary innovation technologies; however, some will go towards hydrating disruptive technologies and new business models such as water as a service.

These three trends, fueled by increasing investor interest, will continue to challenge and disrupt the water sector status quo. The traditionally slow pace of innovation and scaling of new technologies and business models is giving way to faster adoption in response to the harsh reality of the impacts of climate change; democratized access to data and actionable information; and failing aging infrastructure and outdated public policies.

Originally published in GreenBiz on January 12, 2022

 

Article by Will Sarni, founder and CEO of water strategy consultancy, Water Foundry. He is also the CEO of the Colorado River Basin Fund, the first placed-based water-focused investment fund in the United States.

Prior to Water Foundry, Sarni was a managing director at Deloitte Consulting where he established and led the water strategy practice. He was the founder and CEO of Domani, a sustainability strategy firm, prior to Deloitte.

Sarni is the author of five books: Corporate Water Strategies;  The Water Tech Book;  Beyond the Energy-Water-Food Nexus;  Water Stewardship and Business Value;  Creating 21st Century Abundance Through Public Policy Innovation.

Sarni is a co-founder of WetDATA and a host of the podcast, The Stream with Will and Tom. He is a board member of Flowater, Silver Bullet, Project WET and the Rocky Mountain Rowing Club. He was the Chairman of the Scientific Advisory Board for the WAITRO Global Water Innovation Summit 2020 and was on the Scientific Program Committee for Stockholm World Water Week from 2013 through 2019. His advisory work includes working with the 2020 X-PRIZE (Infinity Water Prize), as a Bold Visioneer for the 2016 X-PRIZE Safe Drinking Water Team and a Technical Advisor for the Climate Bonds Initiative: Nature- Based Solutions for Climate and Water Resilience. He is also on the Editorial Board of the Journal of Water Security. 

Visit WillSarni.com for more information.

Additional Articles, Energy & Climate, Impact Investing, Sustainable Business

Clean200 Companies Continue to Outperform MSCI ACWI Global Index

As You Sow and Corporate Knights recently released their 9th update of the Carbon Clean 200, a list of 200 publicly traded companies worldwide that are leading the way among their global peers to a clean energy future.

Key Findings Include:

  • Clean200 companies generated a total return of 107.09% beating the MSCI ACWI broad market index (103.15%) and MSCI ACWI/Energy Index of fossil fuel companies, (31.67%) on Total Return Gross — USD Basis from the Clean200 inception of July 1, 2016 to Jan. 31, 2022.
  • $10,000 invested in the Clean200 on July 1, 2016, would have grown to $20,709 by Jan. 31, 2022, versus $20,315 for the MSCI ACWI broad market benchmark and $13,167 for the MSCI ACWI/Energy benchmark for fossil fuel companies.
  • 10 companies that contributed the most to the Clean200’s outperformance over the past year were primarily from China, the U.S., South Korea, and Canada and include electric vehicles, environmental protection, energy conservation solutions, and green energy themes.

“In 2016 we created the Clean200 in response to investors saying, ‘if we divest fossil fuels there is nothing to invest in,’” said Andrew Behar, CEO of As You Sow and report co-author. “The Clean200 has demonstrated consistently that the clean energy future is the clean energy present. This year, the scale and global diversity of leading companies continue to expand and redefine the term cleantech to be any company that has products and services that will reduce demand for fossil fuels and water.”

The top 10 companies on the list by revenue include Apple Inc., which offers sustainably-certified phones and laptops; Alphabet Inc. whose operations are 100% powered by renewable energy; Intel Corp.; Taiwan’s TSMC for low-energy microchip solutions; and Iberdrola SA for clean power generation. Thirty-two countries are represented in the Clean200, including the U.S. (53), Canada (18), China (16), France (12), and Japan (11).

Top 10 Clean200 companies by revenue chart

“Without major tech outperformers like Amazon and Microsoft or any of the fossil fuel stocks now surging on the back of high oil prices, the Clean200 still managed to outperform both the blue-chip and oil and gas indices over the past five years, signaling the market’s confidence in their mojo to take our economy forward post-pandemic,” said Toby Heaps, CEO of Corporate Knights and report co-author.

The Clean200 utilizes Corporate Knights Clean Revenue database which tracks the percent of revenue companies earn from clean economy themes including energy efficiency; green energy; electric vehicles; banks financing low-carbon solutions; real estate companies focused on low-carbon buildings; forestry companies protecting carbon sinks; responsible miners of critical materials for the low-carbon economy; food and apparel companies with products primarily made of raw materials with a significantly lower carbon footprint; and Information and Communications Technology (ICT) companies that are leading the way on renewable energy while also being best-in-sector according to currently accepted privacy benchmarks.

The list excludes companies that are flagged on As You Sow’s Invest Your Values suite of mutual fund transparency tools that identify companies involved in fossil fuels, deforestation, weapons, gender inequality, tobacco, and the prison industrial complex.

“We will continue to track and share the emergence of this economic powerhouse,” Behar continued. “There is now clear financial evidence showing a broad spectrum of companies and market forces making the economic transformation, which is our greatest hope in controlling climate change.”

 

As You Sow is the nation’s leading shareholder advocacy nonprofit, with a 30-year track record promoting environmental and social corporate responsibility and advancing values-aligned investing. Its issue areas include climate change, ocean plastics, pesticides, racial justice, workplace diversity, and executive compensation. Click here for As You Sow’s shareholder resolution tracker.

Corporate Knights is a research and media B Corp that seeks to provide information that empowers people to harness markets for a better world.

As You Sow and Corporate Knights are not investment advisors nor do we provide financial planning, legal, or tax advice. Nothing in the Carbon Clean 200 Report shall constitute or be construed as an offering of financial instruments or as investment advice or investment recommendations.

Additional Articles, Energy & Climate, Impact Investing, Sustainable Business

15th annual State of Green Business Report

Top Sustainable Business Trends of 2022

By Joel Makower, GreenBiz Group

We find ourselves in uncharted and unfamiliar territory. Again.

The worlds we collectively inhabit — corporate sustainability, sustainable finance, the circular economy, climate tech — are all reaching inflection points, growing and changing faster than many could have imagined. Along the way, they’re roiling industries, companies, jobs and career paths — mostly for the better but also in a be-careful-what-you-wish-for kind of way.

The Age of COVID has coincided with the rise of nearly every aspect of sustainable business: companies’ commitments to achieving net-zero greenhouse gas emissions; the mind-blowing uptake of green bonds and sustainability-linked loans; the inexorable growth of renewable energy, alongside its declining price; the mainstreaming of electric vehicles; the rise of concern about biodiversity loss and its economic impact, and more.

Indeed, the past two years of pandemic life seem to have left sustainable business relatively unscathed. With good reason: Despite our self-imposed isolation, the klieg lights focused on companies’ environmental and social commitments and performance have grown increasingly brighter and hotter, in lockstep with the rise of concern about the scale, scope and pace of change. With the signs of a changing climate becoming ever more apparent — and costly — the business world is finally recognizing that sustainability is not merely a nice-to-do activity.

Which is not to say that companies are solidly on the case. True, the pace of change has quickened, with more companies making bigger commitments, but it’s far from what’s needed to address the challenges before us. Carbon emissions, which dropped in tandem with the tanking global economy during 2020, resumed their relentless climb in 2021, faster than many scientists predicted, according to the Global Carbon Project. And scientists expect emissions to rise even further in 2022 as the global economy continues to pick up steam.

That’s just one data point, albeit a significant one, casting a pall over the corporate sustainability landscape. There’s the continued loss of biodiversity spurred by land-use changes from economic growth coupled with the ravages of a changing climate. There’s the ongoing loss of fisheries and marine ecosystems upending the seafood industry. There’s the growth of water stress due largely to population and economic growth: Just over half — 52 percent — of the world’s projected 9.7 billion people will live in water-stressed regions by 2050, with most in developing economies, according to the MIT Integrated Global System Model Water Resource System.

That’s the duality in which the world of sustainable business exists: Impressive progress, innovation and achievements, but nowhere near enough to stem the tide of the terrifying environmental and socioeconomic challenges ahead.

Still, there’s no denying that the pace of change is quickening inside companies. The number of consortia, partnerships, initiatives, and innovations can be overwhelming, even breathtaking at times. Whereas not long ago, the center of gravity could be found inside a handful of sectors — consumer goods, information technology, retail and apparel come to mind — today, there’s no part of the economy untouched by sustainable innovation.

Witness the rise of climate tech, shorthand for a stunning array of technologies and solutions aimed at decarbonizing business and commerce. They represent the convergence of leading edge thinking in artificial intelligence, blockchain, green chemistry, synthetic biology, advanced materials, remote sensing and other disciplines and technologies. Individually and in concert, these future-facing advances stand to reinvent large swaths of the economy.

We’re already seeing the fruits of those innovations: plant-based proteins, textiles and chemicals; advanced, low-carbon steel, concrete and other materials; the electrification of buildings and vehicles; cleaner and more resilient energy systems; adaptive, climate-resilient infrastructure.

One challenge, and opportunity, is whether and how these innovations scale quickly enough to offset the growing global economy, and whether they will be accessible to those at every rung of the economic ladder — in particular, communities, businesses and individuals in rapidly growing economies in Asia, Africa and South America.

It won’t be easy. If the inequitable distribution of COVID vaccines is any indication, the world’s richest countries are ill-prepared to adequately care for those in need. To the extent that we can view the current pandemic as a peek into the kinds of global emergencies we may increasingly be confronting — well, it’s a sobering reality check.

One bright spot in all this is the world of finance, which has finally recognized both the business risks and opportunities of a climate-changing world. The world’s largest banks, insurance companies, institutional investors and pension funds are increasingly moving funds out of polluting industries — or, at least, companies within those industries deemed to be least prepared to meet the new environmental realities — and into companies and funds that seem to be part of the solutions.

It’s a highly imperfect process. The ability to accurately distinguish climate leaders from laggards continues to befuddle the world’s largest investors and financial markets. Many of the banks that profess to be shifting funding away from polluting companies and industries are still backing coal mines and oil wells. Investment funds purporting to focus on companies that score well on environmental, social and governance (ESG) issues still have polluting companies in their portfolios.

It will be a long, slow process to shift completely away from the bad to the good, assuming we can agree on what “good” even means. The sobering challenge: We don’t have that kind of time.

One area of growing focus are companies’ lobbying efforts and political support of legislation and public policy that can accelerate the kinds of changes scientists say we need to make. For years, companies willing to stand up against the well-funded fossil-fuel lobby were relatively few and far between. That’s just beginning to change. The pressure of activist and advocacy groups pushing businesses to get off the sidelines and take a stand is rising. If corporations do — and that’s a big “if” — the private sector could further burnish its credentials as a positive force for change.

However, if businesses opt for short-term profit over longer-term survival, it will be that much tougher to make progress. Either way, the story of corporate climate advocacy will be one of the more interesting to watch in the year ahead.

There are other story lines we’ll be following in 2022 and beyond, some of which are detailed in this report: the challenges of driving sustainability and decarbonization through company supply chains; how “true zero” is becoming the new mantra for clean-energy buyers; regulators’ newfound focus on sustainable finance and ESG reporting; the professionalization of the circular economy; the growth of resale in consumer markets, and more.

There’s plenty to be hopeful about in 2022 — and even more to instill fear for our collective future. Which will predominate?

The Top Sustainable Business Trends 2022:

  • HR Ups Its, Sustainability Game
  • Resale Finds Its Second Life
  • The Circular Economy Gets Professional
  • Biodiversity Meets the, Bottom Line
  • Sustainability Gets Baked into Food Design
  • Circular ‘Mining’ Reaches for the Mainstream
  • Supply-Chain Data Gets Granular
  • Clean Energy Aims for True Zero
  • Regulators Rein in the ESG Bandwagon
  • Logistics Gets on a Sustainable Track

Download the free State of Green Business 2022 report to explore the top sustainable business trends of 2022, as well as two new components of this year’s report: the state of green jobs and skills, developed in collaboration with LinkedIn, and the state of net zero, by S&P Global Sustainable.

 

Article by Joel Makower, Chairman & Co-Founder, GreenBiz Group

Additional Articles, Energy & Climate, Impact Investing, Sustainable Business

WAVE Fills Gap in Evaluating Water Risk by Dylan Waldhuetter The Water Council

WAVE Fills Gap in Evaluating Water Risk

By Dylan Waldhuetter, The Water Council

(Above image – the Milwaukee skyline and Lake Michigan. Photo credit: Peter Zuzga, courtesy of The Water Council)

Dylan Waldhuetter The Water CouncilWater risk hasn’t received the same attention as carbon emissions in sustainable investing, but if you’re not paying attention to water, you’re already behind. Droughts, floods, deteriorating infrastructure, poor water quality and more are materially impacting companies’ direct operations and supply chains across the globe. The changing climate will only accelerate the manifestation of these water risks.

“Besides climate change, I don’t think there’s a more important issue in terms of investing,” said Julie Gorte, senior vice president for sustainable investing at Impax Asset Management. “We’ve all seen companies take material hits because of drought. There’s hardly any place now where water is immaterial to an investment decision.”

Companies are good at monitoring, quantifying, and reporting on withdrawals and usage, but exposure and response to water risks and opportunities is trickier to measure. Businesses deal with a variety of risks related to water quality and quantity depending on how they use water and where their facilities and supply chains are located. While many companies have pledged their commitment to water and frameworks exist to adopt water stewardship practices at the site level, there is a critical execution gap between the two.

The Water Council, an internationally acclaimed nonprofit dedicated to freshwater innovation, created WAVE to fill that gap. WAVE – Water Stewardship Verified – provides a methodology to develop thoughtful strategies, set meaningful goals and take impactful action on water across the enterprise, concluding with independent verification that the company has built a credible foundation of knowledge on which to base its water stewardship work. Based on global best practices, it sends a strong message to investors, customers and employees that the company is methodically defining its exposure to water risks and taking a strategic approach to mitigating them across the enterprise. Ultimately, the company is better able to translate credible water action into verified external reporting.

The Water Council has helped companies from large multinational corporations to small family-owned businesses mitigate water-related risk and improve water stewardship outcomes. From 2015 to 2021, The Water Council served as the North American Regional Partner for the Alliance for Water Stewardship, helping build the business case for water and creating the world’s first credentialing program for water professionals.

The WAVE program, launched earlier this year, follows a six-step process for a company to understand its water uses, impacts and risks; approve a corporate water stewardship policy; prioritize sites to mitigate water-related risk; and communicate plans and goals.

“WAVE helps cut through the complexity and gives companies a good entry point into water stewardship by demystifying key concepts and best practices,” said Matt Howard, vice president of water stewardship at The Water Council. “We want to lower the barrier to entry for companies starting a water stewardship plan.”

While the program evaluates water-related risk, it also addresses opportunity by engaging with stakeholders in watersheds where the company operates.

“When you get into true water stewardship, then you’re proactively looking for ways to address those common challenges and common opportunities that people share within the same watershed,” Howard said. “The upside is long-term security and sustainability of the water resource.”

All of this demonstrates the need for investors to improve their evaluation of company water performance. If companies and investors don’t recognize water risk and opportunity, they’re opening themselves up to surprise and uncertainty in the future, Gorte said. “You want every company to be aware of its dependence on and vulnerability to water throughout the supply chain,” she said. “But you also want companies to be aware that there are opportunities.”

Independent verification is key to the WAVE program, said Rae Mindock, manager for responsible water practices at SCS Global Services. Since 1984, SCS Global Services has been a leader in the field of sustainability standards and third-party certification. Many companies are trying to capture the Environmental, Social and Governance (ESG) investment dollars flooding the market, but often they aren’t verifying their sustainability work, leading to a component of greenwashing, Mindock said.

“With WAVE, that component is gone,” she said. “When you work with people who are knowledgeable about stewardship combined with people who are knowledgeable about verification, that’s a program we can get behind and be proud of.”

Upon verification, WAVE participants are entitled to use a seal and claim indicating the company has assessed water-related risk across the enterprise, identified the highest water-related impacts using credible water-related data, and implemented best practice in improving water stewardship performance.

The Water Council headquarters at the Global Water Center in Milwaukee, WI (photo courtesy of The Water Council)

The Water Council pilot tested the program with public companies A. O. Smith Corporation, Badger Meter, Nutrien and Watts Water Technologies.

The WAVE process helped Nutrien, a fertilizer producer and the world’s largest provider of crop inputs, services and solutions, think about the watersheds it operates in, not just water use at its own sites, said Mike Nemeth, senior advisor for agricultural and environmental sustainability. It also helped the company develop a corporate water stewardship position and pathway for Nutrien to participate in water stewardship more broadly in the agriculture sector.

“From the very top of our organization all the way down, we knew exactly what we were saying about water and how we were going to act to be good water stewards in our sector,” Nemeth said.

As a result of the program, Nutrien created a cross-functional water targets team committed to developing context-based water targets and identified watersheds with higher water-related risk that they can prioritize for action.

Watts, a global water solutions provider, got connected to WAVE through Impax, one of its investors, as it sought to continue improving its water stewardship. Through the program, the company chose eight sites to prioritize for water stewardship action based on water withdrawals, wastewater discharges and local watershed risks.

Robert J. Pagano Jr., president and CEO of Watts, said that his company’s participation in the WAVE “allowed us to better understand how we affect water resources, both upstream and downstream, at eight of our worldwide facilities.”

Water is a unique and vital resource that all businesses and communities depend upon, with diverse challenges depending on how you use water and where you operate. Companies must move beyond a narrow-minded, non-contextual focus on water use and efficiency. It’s time for companies to embrace water stewardship and implement a strategic approach to water risk mitigation across the enterprise – and it’s time for investors to start asking for it.

 

Article by Dylan Waldhuetter, Director of Water Stewardship Solutions at The Water Council, where he is responsible for program development and support related to the council’s water stewardship initiative.

Additional Articles, Energy & Climate, Impact Investing, Sustainable Business

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